Lael Brainard: America’s Top Economic Diplomat Readies for a New Role

WHY YOU SHOULD CARE

In joining the Federal Reserve Board, Brainard will help shape the U.S. economic recovery, reassert America’s position in world markets and blaze a trail as a leading female economist.

January 14, 2014

She’s called out China and stared down congressmen in the name of President Obama. Next up: critical decisions on how to unwind the emergency financial measures the United States took at the depth of economic crisis, a process that is already shaking world markets.

Whether pushing America’s frenemies on currency manipulation or taking on critics of the President’s Wall Street reforms, Lael Brainard — until recently the administration’s top economic diplomat — and her no-nonsense approach to some of the world’s toughest economic challenges are headed over to the Federal Reserve. There, she’ll be part of President Obama’s dramatic remaking of the powerful board of governors that controls America’s money supply, and with it, some of the major levers for influencing the U.S. economy.

Brainard was the Treasury Department’s point person on international issues during a tumultuous time for the global economy.

Obama nominated Brainard to be a Federal Reserve governor on Jan. 10, one of three people he named to the seven-person board this month. If confirmed (which is assumed), Brainard and co. will join Janet Yellen, whom the Senate last week approved as the Fed’s next chair.

Obama’s Tough Economic Operator

Source Corbis

Thanks in part to their lengthy 14-year terms, Brainard and the other Fed newbies will help the president leave a stamp on the most watched economic body in the world long after he’s left 1600 Penn.

For 51-year-old Brainard (who declined an interview for this article), the Fed nomination is yet another step in a steady ascent up the ranks of the economic policy world.

And it may not be her last.

Brainard, who spent part of her childhood in Communist-era Eastern Europe, is native to global thinking. The Harvard-trained economist was deputy national economic adviser under President Clinton, with a focus on global economic issues. In that role, she helped develop policy response to the Asian financial crisis and China’s rise in the world economy. She went on to create and head the Brookings Institution’s Global Economy and Development Program over her eight years there — all before becoming an early Obama Treasury Department appointee.

Her task was to persuade other countries to pursue financial reforms, commit to their own economic stimulus and pre-empt currency wars.…

Under Obama, Brainard was the Treasury Department’s point person on international issues during a tumultuous time for the global economy. She represented the United States at key bodies like the G-20, which represents the world’s top 20 economies, as international leaders tried to coordinate their response to the world’s financial meltdown. It’s always been one of Treasury’s most important portfolios, but never more so than during Brainard’s tenure. Her task was to persuade other countries to pursue financial reforms alongside the United States, commit to their own economic stimulus and pre-empt currency wars as countries experimented with ways to get their economies on track.

Brainard’s post at Treasury has also been a launching pad to even bigger things. To wit: Former Treasury Secretaries Tim Geithner and Larry Summers are just two of the economic luminaries who’ve held the position she just vacated.

It’s less obvious how her background applies to her future role at the Fed, where she and her six colleagues will be responsible for “tapering” the emergency measures the board took at the depth of the crisis. And they’ll have to do it without upsetting the United States’ still fragile recovery. That includes not just easing off the bond-buying program known as quantitative easing, but also making decisions on raising interest rates, which have been kept at historically low levels over the past several years.

Summers, for one, offered a vote of confidence, writing in an email that Brainard “is an extraordinarily capable economist with a keen policy sense and great skill as a negotiator.”

Colleagues recall her as a relentless negotiator with an impressive penchant for keeping her cool.…

”She would be a very strong Fed appointment given her deep knowlege of international finance and its institutions,” added Summers, who is a professor and president emeritus at Harvard University.

He’s not alone in up-voting her: both domestic and global economic minds tout Brainard’s reputation as a top economic policy mind. In public, she’s soft-spoken and cautious (like other economic policy makers whose words can move markets), but behind the scenes, her reputation is as a tough-as-nails representative for U.S. interests.

The daughter of an American diplomat, Brainard had a dedication to public service instilled in her at a young age, friends and associates say.

Her colleagues at Treasury recall her as a relentless negotiator with an impressive penchant for keeping her cool, even through all-night talks with foreign officials trying to hammer out a collective response to the world financial crisis. Her command of issues from the Dodd-Frank legislation overhauling Wall Street regulation to European bank bailouts to Asian currency and export practices earned her respect and admiration of staff, and even potential adversaries.

She’s the ”kind of the person who, it’s hard to be confrontational with her because she doesn’t comport herself that way,” says a senior Republican House aide who spoke on background. He says her ability to be firm but measured and communicate across both sides of the aisle – a tricky balancing act in Washington’s hyperpartisan atmosphere – earned her the respect of Republicans in Congress.

According to Australia’s Treasury executive director Mike Callaghan, who has sat across the table from Brainard at many international economic meetings, she’s ”a highly competent, articulate and respected representative for the U.S.”

”She had a reputation of being very smart, quite a tough operator,” writes another foreign diplomat. And then there’s the fact that, as a blond woman, she ”naturally stood out in a room full of boring suits.”

Brainard, for her part, plays down her gender. But the reality is that she remains a distinct minority in her field. And friends and colleagues say they can’t help but marvel at her ability — along with that of husband Kurt Campbell (a former high ranking State Department official on Asia policy) — to juggle parenting responsibilities for their three young daughters, despite ferocious travel schedules. All in a day’s work.

She may not be able to duck the gender question forever — given the trajectory Brainard is on, a nomination to become the United States’ first female secretary of the Treasury down the road is quite a real possibility. Could we hear the sound of one more glass ceiling shattering before long?